Homeland Security Secretary Janet Napolitano, shown here in a file photo, defended local-federal “fusion centers” against a critical Senate report that she called “wrong and misleading by omission.” Napolitano said the centers provide a real boost to counterterrorism efforts. (Cronkite News Service by Matthew Standerfer)

WASHINGTON – Arizona police agencies were among those singled out in a two-year Senate probe that reported “widespread deficiencies” in a Homeland Security Department program that officials touted for years as a centerpiece in U.S. counterterrorism efforts.

The report found that the local-federal “fusion centers” that were supposed to aid the federal government in terrorism prevention instead produced intelligence that was “oftentimes shoddy” and “unrelated to terrorism,” and it said federal officials could not adequately track millions of dollars directed to the centers.

Included in the questionable spending was money to Arizona law enforcement agencies that was used to buy sport utility vehicles and to outfit the “wire room,” a surveillance monitoring room at the Arizona Counter Terrorism Information Center, the state’s fusion center.

Sen. John McCain, R-Ariz., a member of the Homeland Security and Governmental Affairs Committee, said in a written statement that the committee’s Permanent Subcommittee on Investigations “found a remarkable degree of ineffectiveness, ineptitude and waste” in the program.

But Homeland Security Secretary Janet Napolitano said Thursday the subcommittee’s report is “wrong and misleading by omission.” Napolitano said she firmly believes fusion centers provide “a big service to the community” by augmenting existing counterterrorism efforts.

There are currently 77 fusion centers across the country. While the state and local law enforcement hubs perform many roles, their anti-terrorism functions were beefed up, and the number of centers increased, after 9/11 to aid the federal government in terrorism prevention.

Matt Mayer, a former senior Homeland Security official who worked under secretaries Tom Ridge and Michael Chertoff, said he fought the expansion of the centers but lost. Mayer said the department has focused on “quantity over quality” and is underfunding fusion centers in critical areas.

“There are bright spots out there … but unfortunately a lot of (fusion centers) exist that don’t deserve funding,” said Mayer, now a visiting fellow at the Heritage Foundation.

Among its findings, the subcommittee said that DHS could not provide an “accurate tally” of the program’s total costs, but that it provided “estimates which ranged from $289 million to $1.4 billion.”

Some of that DHS grant money went to the Arizona Department of Public Safety to fund initiatives at the Arizona Counter Terrorism Information Center.

The subcommittee questioned federal oversight of some of the Arizona spending, including one case when a state official expressed concern about the legitimacy of spending $1.98 million to lease space, which is not strictly allowed. The state official was assured it would be OK in an email, complete with smiley-face emoticon, from an official at the Federal Emergency Management Agency.

“Before using FEMA funds to make payments on ACTIC’s lease, an Arizona official queried FEMA about the allowability of the expenditure. The official’s response indicates FEMA’s guidelines are not rigidly enforced,” the subcommittee said in its 141-page report.

Federal funds also paid for two SUVs outfitted with specialized equipment, most of which fell outside of the scope of the program, the report said.

The Department of Public Safety used about $33,500 in grant funds to buy an SUV in 2008 for a terrorism liaison officer at the Flagstaff Fire Department, and another $9,400 on aftermarket equipment that would let it respond to chemical, biological and other events. But the report said such responses are unrelated to “essential fusion center capability” under the program.

“The city official to whom the vehicle was assigned told the subcommittee he keeps the truck at his house and uses it primarily to commute between his home and the Flagstaff Fire Department,” the report said.

In 2009, the Arizona State University Police Department got an SUV that was paid for with about $47,000 in grant funds, also for a terrorism liaison officer. Again, the subcommittee found the expenses outside the grant’s purpose.

The subcommittee also pointed to $64,000 in federal funds used to buy software, a laptop, monitors and two 42-inch flat-screen televisions for “the wire room,” a surveillance room used for criminal investigations. But the subcommittee noted that program guidelines “do not include covert or surreptitious intelligence gathering.”

The report said the centers have not “yielded timely, useful” counterterrorism information. It noted that ACTIC was linked to incorrect information after the 2011 shooting of Rep. Gabrielle Giffords, D-Tucson, which suggested that shooter Jared Lee Loughner was linked to an anti-Semitic and anti-government group. Many of the claims made in the document were later proven false, according to the report.

“This example showed how a center’s weak analysis could actually hinder anti-terrorism and law enforcement efforts,” the report said.

Officials with the Arizona Department of Public Safety said this week that they were digesting the report, but they had not released a response to it as of Friday evening.

Among its recommendations, the subcommittee called for increased oversight of fusion center grant funds and improved training for officers in the field who file intelligence reports.

“They have been essential to breaking down the information silos and communications barriers that kept the government from detecting the most horrific terrorist attacks on the country,” Lieberman said.

Mayer said he hopes Napolitano takes the report’s recommendations into account, and also reduces the number of fusion centers. In the meantime he said, fusion centers continue to add more hay to the intelligence community’s haystack, which is “a real security risk.”

“If you don’t have an efficient operation, you could actually miss the needles,” Mayer said.